So you're worried about your debts. They're starting to get on top of you and you're struggling to keep up with your monthly repayments. You have some money left over at the end of the month to pay towards your debts – but it's just not enough.
If that sounds like you, then you're not alone – there are lots of people in your position. It's all too easy to let debts mount up from different sources until it becomes impossible to meet all the required payments.
Although you might feel backed into a corner, there are debt solutions available for many different situations – and one that often proves ideal for the scenario described above is a debt management plan (DMP).
A debt management plan helps you to make reduced monthly payments towards your debts, usually arranged by a third party – for example, a debt charity like us or a debt management company who can help you deal with creditors.
Reduce your debt payments
A DMP will only work if you have some money left over from your monthly income once you've paid for all your essential living expenses.
The debt management organisation arranging your plan will draw up a proposal for your creditors, asking them to accept the reduced payments. They will also ask for interest and charges to be stopped.
For example, if you have ten unsecured creditors you will only pay one monthly payment (your available income) and the debt management organisation divides this payment between your creditors.
Free versus fees
As a respected debt charity, creditors usually agree to our proposal. Also, our services are completely free and we don't charge you for arranging and managing your plan. That means everything you pay goes towards reducing your debts.
However, profit-making debt management companies will add charges to your monthly total, which means it will take you much longer to pay off your debts.
The key to the success of any debt plan is that you only pay what you can afford and as your situation improves, you pay the debt off as soon as you are able to.
Our priority in arranging a DMP is to make sure you have a reasonable amount of money to live on.